(Reuters) - Intel Corp beat earnings expectations for the first quarter and raised its full-year revenue and profit forecasts on Thursday, driven by the biggest-ever quarterly jump in its data center business and small-but-steady growth in its personal computer business.

Shares of the Santa Clara, California-based chipmaker rose 5.4 percent to $55.95 in after-market trading after it said it expects full-year revenue of $67.5 billion, up $2.5 billion from prior guidance.

Intel has been focused on transforming itself from a supplier of processors for personal computers to a maker of chips for growing data center business and newer areas such as driverless cars and artificial intelligence. That shift appeared to be taking hold as revenues for Intel's data center business accounted for almost half of the company's revenue in the first quarter, the highest proportion ever.

Intel said fresh demand for applications such as artificial intelligence fueled the data center business. But Intel Chief Financial Officer Robert Swan warned that the brisk growth of that business in the past two quarters, particularly from business customers building out their own computing clouds, would be hard to match in the second half the year.

"We do expect there to be deceleration for [data center business] growth from first half to second half for sure," Swan said on a conference call with investors. "We hope we're wrong."

Still, the better-than-expected results and brighter forecast pushed shares to their highest in at least five years. The data center results also suggest the chipmaker's large customers have not been deterred by two chip flaws that emerged earlier this year.

Intel said it plans to allot $14.5 billion to capital spending this year, much of which will go toward building up its relatively new memory chip business.

But the company also said $1.7 billion of its free cash flow for the quarter came from long-term supply agreements for its memory business, which could help protect the company against a drop in memory prices that has spooked chip investors this year. That business grew 20 percent year over year to $1 billion.

Intel executives also said that the unit that contains its modem chips that help Apple Inc 's iPhones connect to mobile data business will grow faster than the rest of Intel's sales. Intel's Swan said investments in that division to ramp it up could compress Intel's margins in the short term.

Last fall, Reuters reported that Apple had designed iPhones and iPads that could drop Qualcomm Inc's modem chips in favor of Intel chips, though it is not clear Apple has yet made a final decision.

Revenue from Intel's client computing business, which supplies chips to PC makers and is the biggest contributor to sales, rose 3 percent to $8.2 billion, beating estimates of $7.91 billion, according to Thomson Reuters I/B/E/S.

Revenue from the data center business posted a record gain of 24 percent to $5.2 billion, beating estimates of $4.73 billion.

The company's net income rose to $4.45 billion, or 93 cents per share, in the quarter ended March 31, from $2.96 billion, or 61 cents per share, a year earlier.

Net revenue rose to $16.07 billion from $14.80 billion.

Excluding items, the chipmaker earned 87 cents per share.

Analysts on average were expecting Intel to report a profit of 72 cents per share on a revenue of $15.08 billion, according to Thomson Reuters I/B/E/S.

(Reporting by Sonam Rai in Bengaluru and Stephen Nellis in San Francisco; Editing by Chris Reese and Tom Brown)